13 hours Ago By Rytis Beresnevičius
Spirit Airlines has announced that on March 12, following several months of operating under Chapter 11 bankruptcy protection, the airline emerged from its bankruptcy case and successfully restructured its debt, which could have led to a default. Less debt and more financial flexibility On March 12, Spirit Airlines announced that it emerged from its financial restructuring process, completing the voluntary transaction that equitized around $795 million of debt. As a result, with significantly less debt and greater financial flexibility, Spirit Airlines has emerged as a stronger company positioned for long-term success, it said.
The airline also received a $350 million equity investment from existing investors to support its customer experience initiatives. Ted Christie, the President and Chief Executive Officer (CEO) of Spirit Airlines, said that the airline was pleased to complete the restructuring process and, thus, emerge in a stronger financial position to continue its transformation and investments in its passenger experience. “Throughout this process, we've continued to make meaningful progress enhancing our product offerings, while also focusing on returning to profitability and positioning our airline for long-term success.
” Christie concluded that Spirit Airlines is now moving forward with its strategy to redefine low-cost travel with its new and high-value travel options. “Despite the challenges we've faced as an organization, we're emerging as a stronger and more focused airline.” Spirit Airlines declared that it had entered into a voluntary Chapter 11 bankruptcy process in November 2024, detailing that the company had secured a restructuring support agreement (RSA) with a “supermajority” of its loyalty and convertible bondholders.
Spirit Airlines assured its passengers that its operations will continue during the process. New board However, Christie will now be the only Spirit Airlines Board member from pre-bankruptcy times, with the company appointing six new directors “with significant industry and financial leadership experience.” This includes Robert Milton, the former CEO of Air Canada and Chair of the Board of United Airlines, who had been picked by Elliott Investment Management (Elliott) to be on Southwest Airlines’ board, a move that never materialized , David Siegel, the Chairman of Atlas Air, Volotea, and Swissport, Timothy Bernlohr, the former Board member of Atlas Air, and Andrea Fischer Newman, a Board member of StandardAero, a United States-based maintenance, repair, and overhaul (MRO) company.
Eugene Davis and Radha Tilton, the latter of whom is the Vice President and Treasurer of General Motors, are new board members with primarily non-aviation experience. Christie concluded that on behalf of the executive team, he would like to thank Spirit Airlines’ outgoing Board members for their contributions to the airline. The carrier noted that while its shares will remain delisted from the New York Stock Exchange (NYSE) for now, it will relist on the NYSE “as soon as reasonably practicable after the Effective Date of Spirit's Plan of Reorganization.
” While its costs increased, Spirit AIrlines' revenues contracted due to the airline reducing its capacity throughout 2024. Executing a new plan When Spirit Airlines announced its Chapter 11 bankruptcy in November 2024, the company also detailed its post-bankruptcy plan, admitting that leisure travelers expect a more premium experience in the current market. As a result, Spirit Airlines said that it would target more up-scale leisure passengers, including passenger experience-related changes it had announced before its Chapter 11 bankruptcy.
This includes new travel bundles, ranging from ‘Go Big,’ ‘Go Comfy,’ ‘Go Savy,’ and ‘Go,’ with the two former classes introducing first class-like and European business class-like – with a blocked middle seat – seating for the most premium customers. In August 2024, when Spirit Airlines officially launched the four new bundles into service, the quartet included no change or cancelation fees, yet the fees were recently re-introduced for ‘Go’ customers, or the most basic fare bundle. Nevertheless, while Spirit Airlines is confident in its post-bankruptcy future, Frontier Airlines, which had put forth merger offers during the bankruptcy process, was much more skeptical.
The latter airline’s CEO, Barry Biffle, stated in emails related to the merger proposal that first, Spirit Airlines would emerge highly leveraged and that second, if the airline pursues its premium leisure plan, it would be too weak to stave off competition. At the same time, things can change when a new board comes in, a case in point being Southwest Airlines. The airline, which promised to keep free bags for all customers during its Investor Day in September 2024 , made a U-turn several months after Elliott installed five new directors on Southwest Airlines’ Board , with the airline adding a total of six new directors in October 2024.
Spirit Airlines will aim to become an airline of choice for more upmarket segments of passengers..
